How Collective Medical Technologies Conquered Emergency Rooms On A Bootstrap

On November 15, representatives from the New Mexico Hospital Association, UnitedHealth Group, Molina Healthcare, Blue Cross Blue Shield and Presbyterian Healthcare Services gathered at the offices of the state’s hospital association in Albuquerque. Providers and payers weren’t meeting to negotiate contentious contracts, but to discuss monthly progress on a piece of software New Mexico hospitals had started implementing in their emergency department in June. It allowed them to flag patients who make five trips annually to multiple emergency rooms, often opioid addicts, notify their primary care doctor or a case manager and coordinate a care plan.

In an unusual move, payers were footing the bill for the hospital software, and Beth Landon, director of Policy for the New Mexico Hospital Association was breathing a sigh of relief. “It’s not just a nice idea; it’s critical for our survival,” she says. “Collaboration [with payers] happens when our incentives are aligned.”

The software had generated buzz through word of mouth in ERs across the country, after government officials in Washington, reeling from a budget deficit, threatened in 2011 to limit Medicaid reimbursement to three non-emergency visits per year.

“We had a guillotine over our head,” says Stephen Anderson, an emergency medicine doctor at MultiCare Auburn Medical Center, which operates eight hospitals in and around Tacoma and Spokane, Washington. Hospitals pleaded for their own solution. “[We said] instead of blocking access, let us coordinate care of high utilizers.” The governor gave them three months.

They found Collective Medical Technologies, a little company from Salt Lake City, Utah, belonging to Adam Green and Wylie van den Akker, childhood friends from Boise, Idaho. Between school and daytime jobs, they had managed to sell their software to 35% of hospitals in Washington. Emergency doctors raved about it and pushed for its adoption. The governor gave the go-ahead, but all 98 hospitals in the state had to comply. To be effective, they had to share patient information. “The value of the network is in participants,” says Chris Klomp, CEO of Collective Medical, and a childhood friend of the founders.

In one year, Washington’s Medicaid costs fell by nearly $34 million, because of an 11% reduction in ER visits by super users; non-emergency visits dropped by 14%. Moreover, prescription for painkillers decreased by 25%. More than 550 hospitals in 13 states, from Alaska to Massachusetts now want to replicate that feat.

Anderson, who’s been practicing emergency medicine for 30 years, relies on Collective Medical for 40% of his patients. Recently, a 25-year-old woman showed up in the ER at Auburn Medical Center with abdominal pain. At check-in, an alert popped up next to her name. It was her fifth visit in a year. Her chart showed that she had also been to St. Francis Hospital, Highline Medical Center and Valley Medical Center—all within a 20-mile radius of Auburn. Her prescription drug history revealed that six doctors had ordered narcotics. Anderson contacted her primary care doctor, who was unaware of her ER visits, for a next day appointment, and started her on a treatment for opioid dependence.

“It’s [Collective Medical] pretty simple, but works really well,” says Anderson. “I don’t need the hundred-page chart that tells me every single thing, but a one-page summary that we need to know right up front to focus on care.”

He can thank Patti Green, a former emergency department social worker at St. Luke’s Regional Medical Center in Boise. In 2000, she started tracking frequent ER visits on a Word document, which allowed her to address underlying causes—the reason behind an opioid addiction, or unawareness a patient qualified for Medicaid. Although rivals, she shared information with nearby Saint Alphonsus Regional Medical Center on patients who bounced between the two ERs. Doctors loved it.

To expand beyond Word, Green approached the hospital’s IT department in 2005 to build software. Citing costs, her request was rejected. “My mom called me up and said ‘I have this program and I want you to turn it into a computer program,’” says Adam Green, who was studying computer science at Brigham Young University. “You don’t cross my mother.”

In three months, he and his roommate van den Akker, also a computer science student, delivered a web-based application. It included documentation, such as demographics, social determinants, medical history highlights, ER visits and treatment plan. “We tried to minimize the effort hospitals had to expend,” says van den Akker. “If you go after a big data ask, you get pushback.” Still, St. Luke’s didn’t purchase the software. “Hospitals didn’t want to take a bet on two kids in college with no experience in healthcare,” says Green.

The opioid epidemic was coming to the fore, and Washington was reporting more deaths from narcotics than car accidents. Green attended work groups to talk about his mom’s experience and how his software can help. Providence Sacred Heart Medical Center in Spokane decided to pilot it.

To help fund Collective Medical, Green and van den Akker entered business plan competitions, with the motto “Save lives through better technology in healthcare,” and won a total of $15,000. “We didn’t try to raise money, we were more focused on making sure we can drive value for hospitals,” says van den Akker, who developed the technology using HL7 standards to connect different electronic health records. Green tried to drum up more customers, while holding jobs at National Instruments and later Dell in Austin, Texas.

One day in March 2012, two hospitals emailed him requesting the software. “I remember thinking ‘this is odd,’” says Green. Then, a nurse from Olympia, Washington called. “How do you guys like being mandated?” she asked. Unbeknownst to them, doctors had proposed Collective Medical to the state to curtail ER visits. Says van den Akker: “If you want providers to be advocates of your software, it takes time and effort. Anyone trying to sell a quick solution to something is in for a lot of pain.”

Klomp, who helped out with strategy while working in private equity at Bain Capital in Boston, quit in 2014 to join Collective Medical. And last year, Benjamin Zaniello, who was a chief medical information officer at Providence Health & Services in Washington, joined as chief medical officer. Zaniello helped implement Collective Medical at Providence. He was impressed. “They did this alone for many years,” he says. “It wasn’t just a bunch of people with a power point and a dream, or someone from Google with a personal story in healthcare who wants to fix the system.”

Still, despite being around for 12 years, Collective Medical generated only $5.8 million in revenue in 2016. Hospitals seem to have a good deal. Klomp won’t disclose an estimate for this year, but says it will be “multiples” of 2016 revenue. Two years ago, the company expanded its product to coordinate care outside of the ER setting.

To accelerate growth and hiring, it recently raised $47.5 million in series A funding, led by Kleiner Perkins. “Now it’s time to pour gas on the fire,” says Green.